May 25 - Bloomberg: "China's central bank weakened its currency fixing to
the lowest since March 2011 as the dollar strengthened. The reference rate
was set 0.3% weaker at 6.5693 per dollar. A gauge of the greenback's strength
rose to a two-month high Tuesday... A resurgent greenback is shaking up a strategy
that the People's Bank of China pursued over the past three months -- a steady
rate against the dollar, combined with depreciation against other major currencies."

The U.S. dollar index increased 0.4% this week to 95.7 (down 3.0% y-t-d).
For the week on the upside, the British pound increased 0.8% and the Canadian
dollar gained 0.7%. For the week on the downside, the Brazilian real declined
2.6%, the euro 1.0%, the New Zealand dollar 0.9%, the Mexican dollar 0.7%,
the Australian dollar 0.6%, the South African rand 0.6%, Swiss franc 0.4%,
the Swedish krona 0.4%, the Norwegian krone 0.1% and the Japanese yen 0.1%.
The Chinese yuan declined 0.3% versus the dollar.

May 23 - Bloomberg (Tracy Alloway): "Bond investors appear to have placed
their faith in commodities exceptionalism, with many positing that the recent
pick-up in U.S. default rates will defy historical trends and remain confined
to that industry. New research from Deutsche Bank AG pours cold water on that
idea, arguing that there are already signs of contagion in junk-rated debt
outside of the commodities space. A look at previous peaks in default rates
shows the potential for more pervasive corporate stress. While default rates
were higher amongst particular sectors--such as telecoms in the early 2000s
or financials during the 2008 crisis--the rate for junk bonds excluding these
specialized industries also increased significantly."

May 24 - Financial Times (Eric Platt): "The triple A rated company is nearly
extinct. Just a handful of companies in the world retain the coveted rating
from Standard & Poor's after ExxonMobil was downgraded last month. In the
US, the number has fallen to two -- Johnson & Johnson and Microsoft. In
1992, there were 98 US companies that held the highest credit rating from S&P.
The demise of triple A-rated companies reflects a dramatic rise in the use
of debt to help bolster shareholder returns and fund takeover activity."

May 26 - Reuters (Suzanne Barlyn): "New York state's financial regulator,
which recently launched a probe into LendingClub Corp, is preparing to look
into the activities at other online lenders and whether they should be licensed
in New York... Last week, NYDFS subpoenaed San-Francisco based LendingClub,
a so-called peer-to-peer lender..."

May 25 - Bloomberg (Matt Scully): "Some of Wall Street's biggest banks are
making contingency plans to cut their exposure to online consumer loans if
the market deteriorates further after the recent crisis at LendingClub Corp.,
people with knowledge of the reviews said. While firms including Credit Suisse
Group AG and Deutsche Bank AG haven't scaled back exposure, they're concerned
about financing they provide to institutional investors that buy loans from
companies like LendingClub and Prosper Marketplace Inc., the people said."

May 25 - Associated Press (Stan Choe): "CEOs at the biggest companies got
a 4.5% pay raise last year. That's almost double the typical American worker's,
and a lot more than investors earned from owning their stocks -- a big fat
zero. The typical chief executive in the Standard & Poor's 500 index made
$10.8 million... That's up from the median of $10.3 million the same group
of CEOs made a year earlier. The raise alone for median CEO pay last year,
$468,449, is more than 10 times what the typical U.S. worker makes in a year.
The median full-time worker earned $809 weekly in 2015, up from $791 in 2014."

May 22 - Wall Street Journal (Sam Goldfarb): "The esoteric securities market
underpinning demand for the riskiest corporate loans is perking up, raising
hopes that it could become easier for banks to sell a range of loans, including
those that they failed to syndicate last year. More corporate loans are being
bundled this spring into collateralized loan obligations, which buy loans from
junk-rated companies and repackage them into securities that pay varying levels
of interest based on which get paid off first if the underlying loans go bad."

May 25 - Bloomberg (Elizabeth Campbell): "Illinois lawmakers have been busy
in the last week of the regular legislative session. They moved to establish
a youth-only turkey hunting season, set standards on where podiatrists can
perform amputations and allowed for the adoption of retired police dogs. Yet,
the Land of Lincoln remains the only state in the nation without a budget,
mired in the longest such standoff in its history... If no deal is struck,
the consequences will become more dire: Prisons may run out of food, schools
may not open on time, and the state's credit rating -- already the lowest in
the U.S. -- is at risk of falling even further as the government's deficit
continues to grow."

Global Bubble Watch:

May 26 - Financial Times (Robin Harding): "The global economic outlook is
as grim as it was after the Lehman Brothers crisis in 2008, Shinzo Abe claimed
on Thursday, as the Group of 7 revealed its stark divisions on economic policy.
Seeking to rally support for a global fiscal stimulus at the G7 summit, the
Japanese prime minister showed his fellow world leaders a series of alarming
graphs comparing today's economic conditions with those of 2008. But, according
to people close to the discussions, Mr Abe struggled to win over opponents
such as Germany's chancellor Angela Merkel or UK Prime Minister David Cameron."

May 26 - Reuters (Chris Gallagher and William Mallard): "Japanese Prime Minister
Shinzo Abe warned his Group of Seven counterparts of a crisis on the scale
of Lehman Brothers, Nikkei reported, offering a potential justification to
again delay an increase in the national sales tax. Abe presented data at a
Thursday session of the G7 summit he is hosting, showing that commodities prices
have fallen 55% since 2014, the same margin they fell during the global financial
crisis, the newspaper said, interpreting this as 'warning of the re-emergence
of a Lehman-scale crisis'."

May 26 - Bloomberg (Claire Boston and Sally Bakewell): "A borrowing binge
by companies globally is poised to make May one of the the busiest months ever,
thanks to investors who continue to devour the relatively juicy yields on corporate
debt in a negative-rate world. Global issuance of non-financial company debt
will be in excess of $236 billion by month-end... In Europe, companies sold
48.5 billion euros ($54.2 billion) making it the busiest May on record."

May 23 - Reuters (Anjuli Davies): "Revenue at the world's 12 largest investment
banks fell 25% in the first quarter from a year ago as economic uncertainty
and investor caution led to the slowest start since the financial crisis, a
survey showed... Investment banks have been hit by a steep decline in oil prices,
near-zero interest rates and worries about China's economy, which triggered
a wave of volatility in financial markets at the start of the year, normally
the most lucrative period when investors put their money to work. Trading in
fixed income, currencies and commodities (FICC) divisions... declined 28% year-on-year
to $17.8 billion, data from... Coalition shows."

May 26 - Financial Times (Joe Rennison): "Global equity markets experienced
further strong outflows this week, despite soothing economic data and rising
stock prices. Equity funds suffered their seventh consecutive week of outflows,
shedding another $9.2bn for the week ending May 25, taking their total outflows
for the year above $100bn, according to data from EPFR."

U.S. Bubble Watch:

May 23 - CNBC (Jeff Cox): "That American companies have been wadding up huge
amounts of cash is no secret. What may be less well-known is that they're also
accumulating debt at a much faster pace. Total debt among more than 2,000 nonfinancial
companies swelled to $6.6 trillion in 2015, dwarfing the $1.84 trillion in
cash on their balance sheets, according to a study... by S&P Global Ratings.
The ratio of cash to debt is the lowest it's been in about 10 years, or just
before the global financial crisis. As financial markets came to grips with
the prospect of higher rates ahead, corporate America went on a debt bonanza.
Debt grew 50 times that of cash, with companies rolling up $850 billion of
new IOUs compared to just $17 billion, or 1%, cash growth."

May 26 - MarketWatch (Ciara Linnane): "First-quarter earnings season is close
to over, and the numbers it's produced are as gloomy as they have been since
the Great Recession. Overall profit for S&P 500 companies was the weakest
in 6 1/2 years. The financial sector showed a double-digit percentage decline,
while even stodgy utilities saw earnings fall into the red as unusual weather
weighed. After selling assets, cutting capital expenditures and buying back
their own shares at a record pace in recent years, companies are now clearly
struggling to produce any kind of growth... A full 98.4% of S&P 500 companies
have now reported through early Thursday, and profit measured by earnings per
share is down 7% from a year ago, according to FactSet. On the heels of a 3.2%
decline in the fourth quarter, that marks the fourth straight quarter of year-over-year
earnings declines, and it was the biggest drop since the third quarter of 2009."

May 25 - Bloomberg (Jeanna Smialek): "A substantial share of Americans lacked
retirement savings and fewer households were confident in the outlook for their
income at the end of last year. That's according to a Federal Reserve report
on the economic well-being of U.S. households in 2015... The findings show
that while respondents increasingly reported that they are 'doing OK' or 'living
comfortably,' a smaller share said they expected income growth than in the
prior year's survey. Thirty-one percent of non-retired Americans said they
had no retirement savings at all, unchanged from 2014."

May 26 - Wall Street Journal (Jesse Newman): "Banks are tightening credit
for U.S. farmers amid a rise in delinquencies, forcing some growers to turn
to alternative sources of loans. When U.S. agriculture was booming this decade,
banks doled out ample credit to strong performers and weaker growers alike,
said Michael Swanson, an agricultural economist at Wells Fargo & Co. But
with the farm slump moving into its third year, banks have become pickier,
requiring some growers to cough up more collateral and denying financing outright
to some customers who need it to pay for seeds, crop chemicals and rent."

May 27 - Bloomberg (Romy Varghese): "California's three-year boom run is showing
signs of fatigue. Shaking off recession-era comparisons to Greece, the most-populous
U.S. state rebounded with surpluses and an economy fueled by the fast-growing
technology industry, which garnered it eight bond-rating upgrades. Governor
Jerry Brown is now forecasting that revenue growth is slowing along with the
economy after April's income-tax collections lagged expectations, in part because
of the sputtering stock market. Even if voters in November decide to keep a
temporary income-tax increase from ending -- a measure that Brown hasn't endorsed
-- the budget would 'barely be balanced, his administration said..."

May 27 - Bloomberg (Prashant Gopal): "Miami's crop of new condo towers, built
with big deposits from Latin American buyers and lots of marketing glitz, are
opening with many owners heading for the exits. A third of the units in some
newly built high-rises are back on the market, though most are listed for more
than their owners paid in the pre-construction phase. At the current sales
pace, it would take 29 months to sell the 3,397 condominiums available in the
downtown area, according to South Florida development tracker CraneSpotters.com.
With the U.S. dollar strong, South American investors who piled into the downtown
Miami market after the real estate crash are now trying to unload their recently
built condos, adding inventory to an area where 8,000 units are under construction
and nine towers were completed since the end of 2013."

May 24 - Bloomberg (Michelle Jamrisko): "Purchases of new homes in the U.S.
surged in April to the highest level since the start of 2008, pointing to a
robust spring selling season for builders... (Sales) Rose 16.6% to 619,000
annualized rate (forecast was 523,000). Monthly increase was biggest since
1992, while pace was strongest since January 2008. Median selling price jumped
9.7% to a record $321,100."

May 25 - Bloomberg (Prashant Gopal): "U.S. home prices rose 5.7% in the first
quarter from a year earlier as buyers competed for a limited supply of listings.
Prices climbed 1.3% on a seasonally adjusted basis from the previous three
months, the 19th consecutive quarterly gain... There were 1.98 million houses
for sale at the end of March, down 1.5% from the same month last year... While
the U.S. has a whole had robust gains, prices fell from the previous quarter
in 12 states and the District of Columbia, the FHFA said."

May 25 - Wall Street Journal (Louise Radnofsky): "Big health plans stung by
losses in the first few years of the U.S. health law's implementation are seeking
hefty premium increases for individual plans sold through insurance exchanges
in more than a dozen states. The insurers' proposed rates for individual coverage
in states that have made their 2017 requests public largely bear out health
plans' grim predictions about their challenges under the health-care overhaul.
According to the insurers' filings with regulators, large plans in states including
New York, Pennsylvania and Georgia are seeking to raise rates by 20% or more."

China Bubble Watch:

May 24 - Bloomberg (Paul Panckhurst): "Charlene Chu, a banking analyst who
made her name warning of the risks from China's credit binge, said a bailout
in the trillions of dollars is needed to tackle the bad-debt burden dragging
down the nation's economy. Speaking eight days after a Communist Party newspaper
highlighted dangers from the build-up of debt, Chu... said she was yet to be
convinced the government is serious about deleveraging and eliminating industry
overcapacity. She also argued that lenders' off-balance-sheet portfolios of
wealth-management products are the biggest immediate threat to the nation's
financial system, with similarities to Western bank exposures in 2008 that
helped to trigger a global meltdown."

May 26 - Bloomberg: "China's government still has room to borrow more to finance
the investment and construction needed to shore up economic growth, the Ministry
of Finance said. Overall risks associated with government debt, which amounted
to 26.66 trillion yuan ($4.1 trillion) at the end of last year, are under control,
the ministry said in a statement late on Thursday. The government can add leverage
gradually because its debt ratio is still below international warning levels,
it said."

May 25 - Bloomberg (Lisa Pham): "In the creative world of Chinese lending,
there's a new trade in town: the cow leaseback. China Huishan Dairy Holdings
Co., which operates the largest number of dairy farms in the country, is selling
about a quarter of its herd -- some 50,000 animals -- to Guangdong Yuexin Finance
Lease Co. for 1 billion yuan ($152 million) and then renting them back. With
an estimated $1.3 trillion of risky loans in the country, Chinese banks are
becoming more cautious about lending, forcing some companies to look for new
ways to borrow. Finance leasing has been growing in popularity, especially
for purchases of equipment. But cows?"

May 24 - Bloomberg (Zhe Huang and Justina Lee): "The People's Bank of China
scrapped its market-based mechanism for managing the yuan on Jan. 4 and returned
to setting the exchange rate based on what suits authorities the best, the
Wall Street Journal reported, citing unidentified people close to the central
bank. An unidentified official from the PBOC in March told economists and bankers
that 'the primary task is to maintain stability' when they asked the central
bank to stop fighting markets and let the yuan's value fall at a closed door
meeting, citing previously undisclosed minutes of the gathering.

May 26 - Reuters (Elias Glenn): "Profit growth at China's industrial firms
slowed in April, in line with other data for the month which suggested the
economy may be losing steam again after picking up earlier in the year. China's
industrial firms made 502 billion yuan ($76.59 billion) in profits last month,
up 4.2% from the same period last year and compared with growth of 11.1% in
March..."

EM Bubble Watch:

May 26 - Bloomberg (Matthew Martin, Archana Narayanan and Deema Almashabi): "Banks
in Saudi Arabia are coming under fresh pressure over products that allow speculators
to bet against the kingdom's currency peg, according to people with knowledge
of the matter. The Saudi Arabia Monetary Agency has asked lenders to explain
why they are offering dollar-riyal forward structured products to customers
less than four months after the regulator banned options contracts that let
speculators place wagers on a currency devaluation, the people said. The authority,
known as SAMA, didn't reply to requests for comment. Hedge funds... have made
bets that the country's peg to the dollar will be broken as oil revenue plunges..."

May 24 - Bloomberg (Onur Ant): "Turkey's central bank cut its overnight lending
rate for a third month on Tuesday, calling the reduction a 'measured' step
toward simplifying its monetary policy. The bank lowered the rate by 50 basis
points to 9.5%..."

May 22 - Bloomberg (Kartik Goyal): "Massive, game-changing and overwhelming
were among the descriptions investors used for Indian Prime Minister Narendra
Modi's election victory in May 2014. Two years on, the slow pace of implementing
policy threatens to sap interest. The rupee is the worst performer among currencies
of the four biggest emerging markets this year. Indian sovereign bonds have
lagged peers in Brazil and Russia this quarter, after delivering the best returns
among the BRIC nations since the election win."

Japan Watch:

May 22 - Reuters (Stanley White): "Japanese manufacturing activity contracted
at the fastest pace in more than three years in May as new orders slumped...
putting fresh pressure on the government and central bank to offer additional
economic stimulus. The Markit/Nikkei Flash Japan Manufacturing Purchasing Managers
Index (PMI) fell to 47.6 in May..."

May 22 - Reuters (Tetsushi Kajimoto and Leika Kihara): "Japan's exports fell
sharply in April and manufacturing activity suffered the fastest contraction
since Prime Minister Shinzo Abe swept to power in late 2012, providing further
evidence that the premier's Abenomics stimulus policy is struggling for traction.
The bleak readings on the health of the world's third-largest economy follow
Japan's failure last week to win support from its global counterparts to weaken
the strong yen, which Tokyo fears could do further damage to the sputtering
economy... Data on Monday showed Japan's exports fell 10.1% in April from a
year earlier..."

ECB Watch:

May 24 - Bloomberg (Alessandro Speciale): "The European Central Bank warned
that risks of financial-market turmoil have increased amid slower growth in
emerging economies, weak bank profitability and the rise of populist movements
across the 19-nation euro region. 'A sharper-than-expected fall in Chinese
growth could well lead to a synchronized downturn across other emerging-market
economies, particularly commodity-exporting economies,' the ECB wrote in its
twice-yearly Financial Stability Review... 'Under such a scenario, the financial
systems of advanced economies may be challenged by a reduction in consumer
and business confidence, and renewed financial-market volatility potentially
intensified by sudden stops in or reversals of cross-border capital flows.'"

Europe Watch:

May 24 - Bloomberg (Laura J Keller, Stephen Morris and Macarena Munoz Montijano): "Deutsche
Bank AG Chief Executive Officer John Cryan said his bank has never had more
capital and could easily repay its debt many times over, responding to a credit-rating
cut by Moody's... The ratings company on Monday said the German lender faces
mounting challenges in carrying out its turnaround, and cut the bank's senior
unsecured debt metric one level to Baa2, two grades above junk. The firm's
long-term deposit rating fell to A3 from A2."

May 25 - Bloomberg (Thomas Penny, Patrick Donahue and Ian Wishart): "When
Germany hosted last year's Group of Seven summit, European leaders assured
President Barack Obama they were up to dealing with the crises on their doorstep.
Twelve months on, Europe's challenges have multiplied to an extent that questions
the wisdom of making the 6,000-mile trip to Japan for the G-7. From Brexit
to migration, home-grown terrorism to the destabilizing impact of surging populism,
Europe has seldom looked in more need of political leadership at home. Global
summits usually provide an opportunity for heads of government to play the
role of international dealmakers. But right now Prime Ministers David Cameron
and Matteo Renzi, Chancellor Angela Merkel and President Francois Hollande
are faced with coalescing crises -- and restive electorates -- that demand
attention in their own countries"

Brazil Watch:

May 23 - Bloomberg (Carla Simoes, Arnaldo Galvao and Mario Sergio Lima): "Brazil's
newly-appointed Budget Minister Romero Juca said he will take a leave of absence
after allegations surfaced that he wanted to obstruct the sweeping corruption
probe known as Carwash. Juca, the leader of Acting President Michel Temer's
political party, will return to his former job as senator and make room for
Dyogo Oliveira to take the helm of the Budget Ministry... The surprise announcement
on Monday afternoon capped a day of speculation about Juca's future in the
cabinet after he initially refused to step down. The dramatic departure highlights
the challenges facing Temer..."

Leveraged Speculation Watch:

May 25 - Bloomberg (Scott Deveau and Devin Banerjee): "The $2.9 trillion hedge-fund
industry may lose about a quarter of its assets in the next year as performance
slumps, said Tony James, Blackstone Group LP's billionaire president. 'It's
kind of a day of reckoning that we face here,' James said... 'There will be
a shrinkage in the industry and it will be painful. That's going to be pretty
painful for an awful lot of places.' The hedge-fund industry is having its
worst start to a year in performance and investor withdrawals since global
markets reeled after the financial crisis."

May 24 - Financial Times (John Authers and Mary Childs): "It was the shot
heard around the hedge fund world. After the New York City Employees' Retirement
System decided to cash all its investments inhedge funds, Letitia James, the
city's public advocate, delivered a message to the industry straight out of
Occupy Wall Street: 'Let them sell their summer homes and jets and return those
fees to their investors.' Hedge funds, she said last month, 'believe they can
do no wrong, even as they are losing money'... 'Let's face it: if you go back
to the 1990s, hedge funds delivered something very special: high returns or
very differentiated returns that you could not get elsewhere, and that is what
hedge fund investors have been looking for,' said Neil Chriss, founder of Hutchin
Hill Capital... 'The problem is, since the crisis, a lot of hedge funds have
not been delivering. Returns have been mediocre," he told the Milken Global
Conference..."

Geopolitical Watch:

May 27 - Reuters (David Lawder): "Corrosion-resistant steel from China will
face final U.S. anti-dumping and anti-subsidy duties of up to 450 percent under
the U.S. Commerce Department's latest clampdown on a glut of steel imports,
the agency said... The department also issued anti-dumping duties of 3% to
92% on producers of corrosion-resistant steel in Italy, India, South Korea
and Taiwan... China's Commerce Ministry said it was extremely dissatisfied
at what it called the 'irrational' move by the United States, which it said
would harm cooperation between the two countries."

May 26 - Reuters (Thomas Wilson and Kiyoshi Takenaka): "Group of Seven (G7)
leaders agree... on the need to send a strong message on maritime claims in
the western Pacific, where an increasingly assertive China is locked in territorial
disputes with Japan and several Southeast Asian nations. The agreement prompted
a sharp rejoinder from China, which is not in the G7 club but whose rise as
a power has put it at the heart of some discussions at the advanced nations'
summit in Ise-Shima, central Japan."

May 22 - Associated Press (Suzan Fraser and Geir Moulson): "German Chancellor
Angela Merkel told Turkey's president on Monday that Ankara must fulfill all
the European Union's conditions to secure visa-free travel for its citizens,
but Turkey responded that it would suspend agreements with the EU if the bloc
does not keep its promises. The EU says Turkey must narrow its definition of
'terrorist' and 'terrorist act.' The bloc is concerned that journalists and
political dissenters could be targeted. But Turkish president Recep Tayyip
Erdogan has said that is out of the question."

May 26 - MarketWatch (Nicole Perlroth and Michael Corkery): "Security researchers
have tied the recent spate of digital breaches on Asian banks to North Korea,
in what they say appears to be the first known case of a nation using digital
attacks for financial gain. In three recent attacks on banks, researchers working
for the digital security firm Symantec said, the thieves deployed a rare piece
of code that had been seen in only two previous cases: the hacking attack at
Sony Pictures in December 2014 and attacks on banks and media companies in
South Korea in 2013. Government officials in the United States and South Korea
have blamed those attacks on North Korea..."

I just wrapped up 25 years (persevering) as a "professional bear." My lucky
break came in late-1989, when I was hired by Gordon Ringoen to be the trader
for his short-biased hedge fund in San Francisco. Working as a short-side
trader, analyst and portfolio manager during the great nineties bull market
- for one of the most brilliant individuals I've met - was an exciting, demanding
and, in the end, a grueling and absolutely invaluable learning experience.
Later in the nineties, I had stints at Fleckenstein Capital and East Shore
Partners. In January 1999, I began my 16 year run with PrudentBear, working
as strategist and portfolio manager with David Tice in Dallas until the bear
funds were sold in December 2008.

In the early-nineties, I became an impassioned reader of The Richebacher Letter.
The great Dr. Richebacher opened my eyes to Austrian economics and solidified
my lifetime passion for economics and macro analysis. I had the good fortune
to assist Dr. Richebacher with his publication from 1996 through 2001.

Prior to my work in investments, I worked as a treasury analyst at Toyota's
U.S. headquarters. It was working at Toyota during the Japanese Bubble period
and the 1987 stock market crash where I first recognized my love for macro
analysis. Fresh out of college I worked as a Price Waterhouse CPA. I graduated
summa cum laude from the University of Oregon (Accounting and Finance majors,
1984) and later received an MBA from Indiana University (1989).

By late in the nineties, I was convinced that momentous developments were
unfolding in finance, the markets and policymaking that were going unrecognized
by conventional analysis and the media. I was inspired to start my blog,
which became the Credit Bubble Bulletin, by the desire to shed light on these
developments. I believe there is great value in contemporaneous analysis,
and I'll point to Benjamin Anderson's brilliant writings in the "Chase Economic
Bulletin" during the Roaring Twenties and Great Depression era. Ben Bernanke
has referred to understanding the forces leading up to the Great Depression
as the "Holy Grail of Economics." I believe "The Grail" will instead be
discovered through knowledge and understanding of the current extraordinary
global Bubble period.

Disclaimer: Doug Noland is not a financial advisor nor is he providing investment
services. This blog does not provide investment advice and Doug Noland's comments
are an expression of opinion only and should not be construed in any manner
whatsoever as recommendations to buy or sell a stock, option, future, bond,
commodity or any other financial instrument at any time. The Credit Bubble
Bulletins are copyrighted. Doug's writings can be reproduced and retransmitted
so long as a link to his blog is provided.